Correlation Between Hangzhou EZVIZ and Gansu Yasheng

Can any of the company-specific risk be diversified away by investing in both Hangzhou EZVIZ and Gansu Yasheng at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hangzhou EZVIZ and Gansu Yasheng into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hangzhou EZVIZ Network and Gansu Yasheng Industrial, you can compare the effects of market volatilities on Hangzhou EZVIZ and Gansu Yasheng and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hangzhou EZVIZ with a short position of Gansu Yasheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hangzhou EZVIZ and Gansu Yasheng.

Diversification Opportunities for Hangzhou EZVIZ and Gansu Yasheng

0.4

Correlation Coefficient

Hangzhou EZVIZ  Gansu Yasheng

Very weak diversification

The 3 months correlation between Hangzhou and Gansu is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hangzhou EZVIZ Network and Gansu Yasheng Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gansu Yasheng Industrial and Hangzhou EZVIZ is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hangzhou EZVIZ Network are associated (or correlated) with Gansu Yasheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gansu Yasheng Industrial has no effect on the direction of Hangzhou EZVIZ i.e., Hangzhou EZVIZ and Gansu Yasheng go up and down completely randomly.

Pair Corralation between Hangzhou EZVIZ and Gansu Yasheng

Assuming the 90 days trading horizon Hangzhou EZVIZ Network is expected to under-perform the Gansu Yasheng. But the stock apears to be less risky and, when comparing its historical volatility, Hangzhou EZVIZ Network is 1.49 times less risky than Gansu Yasheng. The stock trades about -0.1 of its potential returns per unit of risk. The Gansu Yasheng Industrial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  302.00  in Gansu Yasheng Industrial on September 29, 2024 and sell it today you would earn a total of  1.00  from holding Gansu Yasheng Industrial or generate 0.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Hangzhou EZVIZ Network  vs.  Gansu Yasheng Industrial

Hangzhou EZVIZ Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hangzhou EZVIZ Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Gansu Yasheng Industrial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gansu Yasheng Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gansu Yasheng may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hangzhou EZVIZ and Gansu Yasheng

The main advantage of trading using opposite Hangzhou EZVIZ and Gansu Yasheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hangzhou EZVIZ position performs unexpectedly, Gansu Yasheng can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gansu Yasheng will offset losses from the drop in Gansu Yasheng's long position.

The idea behind Hangzhou EZVIZ Network and Gansu Yasheng Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.